Chapter 1 Summary
What is a Developer
Coordinators encompassing activities that range from the renovation and re-lease of existing
buildings to the purchase of raw land and the sale of improved parcels to others.
They create, imagine, fund, control, and orchestrate the process of development from beginning
to end.
Must respond to events as they occur, and should always be ready for the unexpected.
Must be able to address a citizen’s concerns without compromising the project’s economic goal.
Obtaining creative, cutting-edge work from the team without exceeding the budget.
Five Major Types of Development
Land subdivision, multifamily residential, office, industrial, and retail.
Requirements for Success
Low extreme of risk: may work for a fee, managing the process as agents for other owners.
High extreme: investing the first money, taking the last money out, and full personal liability.
Best way to start is with low risk, such as rehabilitation or leasing.
Should never begin a project unless he has two times the amount of cash that is necessary.
As much as the developer progresses, public approvals are not under his control.
“Beginning developers often take more risk than they have to.” Phil Hughes, pg 5.
Finding the First Deal
At start you must control: land, knowledge, tenants, or capital.
Factors driven by Land: supply, knowledge or tenants: demand, capital: choice.
Controlling a well located piece of property, this aids to the driven approach of supply.
In commercial development, the hardest task is finding the tenant/user.
Know your potential tenant’s needs and controlling the decision about the location is key.
Managing the Development Process
Investment is operating properties is less risk, just managing for an income.
Experienced developers are able to transfer some or most of the risk to others by using other
people’s money or by finding a lender who will give them nonrecourse financing.
Developers who operate alone and invest only their own money are said to be 100% owners.